Senate Proposes Rooms and Meals Tax Increase to Fund Clean Water | Off Message

Senate Proposes Rooms and Meals Tax Increase to Fund Clean Water


Pollution in Lake Champlain has led to beach closures in recent summers. - FILE
  • File
  • Pollution in Lake Champlain has led to beach closures in recent summers.
“Clean water: Funded,” Vermont Sen. Brian Campion (D-Bennington) announced as the Senate Finance Committee adjourned Thursday afternoon.

The triumphant declaration came after the Senate’s tax committee agreed for the first time this year to a source of revenue to pay for Vermont’s $50 to $60 million annual obligation under the federal Clean Water Act.

Even still, Campion acknowledged that the plan is far from finalized.

The proposal would raise Vermont’s rooms and meals tax from 9 percent to 10 percent starting in January and dedicate the increased revenues to the state’s Clean Water Fund.

Senate Majority Leader Becca Balint (D-Windham) said the plan would raise an estimated $8.1 million next year. Combining that sum with existing revenues from the property transfer tax and unreturned bottle deposits, she said, would be enough to put the state on a path toward meeting its clean water goals.

In 2016, the U.S. Environmental Protection Agency ordered the state to reduce pollution flowing into the waters of Lake Champlain and specifically demanded that the state set up a funding mechanism to pay for the tens of millions of dollars of infrastructure work required across the state to address pollution.
In the years since, lawmakers and gubernatorial administrations have repeatedly delayed the funding decision. If the Senate and the House agree on the rooms and meals tax proposal, Vermont may finally make good on its obligation under the EPA order.

The House approved a different proposal last week that would free up money for water quality projects by levying a sales tax on software services accessed online via the "cloud." But Senate Finance Committee chair Ann Cummings (D-Washington) said lawmakers aren't sure how, exactly, that tax would be implemented.
"It sounds like it's not quite as clean as, I buy a copy of Windows 10 and download it to my computer," she said.

Other transactions that don't involve the download of an operating system or other software would also be subject to the tax, and Cummings said lawmakers need a clearer understanding of the policy before they act on it.

"I don't think it's off the table altogether," she said.

In addition to the cloud tax and rooms and meals tax increase, the Senate Finance Committee considered a fee increase on every ton of waste at solid waste facilities. Balint said those fees, currently $6 per ton, haven’t increased in decades. Raising the fee to $12 per ton would bring in an estimated $3 million, according to a report from the legislature’s Joint Fiscal Office, but the committee ultimately decided instead to increase the rooms and meals tax.

Sen. Randy Brock (R-Franklin) said he opposed the proposal because it would make Vermont more expensive to visit.

“I'm concerned that anytime you raise the tax, you potentially have an effect on tourism, which is our biggest industry,” Brock said.

Cummings said she doesn't know if Gov. Phil Scott will support the proposal.

"The governor's office has not talked to me," she said.

Rep. Heidi Scheuermann (R-Stowe) has opposed using the rooms and meals tax because she says tourism — the primary source of revenue from the tax on rooms — and dining out don’t have enough of a connection to the water pollution problem that the legislation is meant to address.

House Ways and Means Committee chair Janet Ancel (D-Calais), whose panel developed the cloud tax proposal, didn't comment Thursday on the merits of the Senate plan.

"All I can say about funding clean water is that it's difficult," she said. "If the Senate has a different idea, then we'll have a conversation."

The Senate Finance Committee is expected to meet Friday morning to finalize the proposal.